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WestBridge-backed Dr Lal PathLabs to acquire majority stake in Indore lab
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Diagnostics chain Dr Lal PathLabs Ltd said on Friday it will acquire a 70% stake in a new company that will house a pathology laboratory in Indore, Madhya Pradesh.

The transaction will help Dr Lal PathLabs strengthen its presence in Madhya Pradesh, the Gurugram-based company said in a stock market disclosure. The stake purchase will not cost more than Rs 50 crore, it added.

The new entity will house the business of Central Lab, Indore, a partnership concern of Vinita Kothari and Sushila Dalal. It will also house the histopathology business that Kothari runs as a proprietorship concern.

The two businesses had a combined turnover of Rs 13.55 crore in the year ended 31 March 2019, up from Rs 10.14 crore the previous year.

Dr Lal PathLabs, which counts public markets-focussed private equity firm WestBridge Capital as an investor, will make the acquisition through wholly owned subsidiary PathLabs Unifiers Pvt. Ltd. The transaction is likely to be completed within three months.

This is the second acquisition of a lab by Dr Lal PathLabs within three months. In April, it agreed to acquire Bawankar Pathology, a sole-proprietorship firm based out of Bhandara in Maharashtra.

In 2016, Dr Lal PathLabs had decided to acquire Delta Ria and Pathology, and purchase additional 10% stake each in two group companies Paliwal Diagnostics and Paliwal Medicare to raise its stake to 80%. 

Dr Lal PathLabs, which was the first Indian diagnostics chain to be listed on the stock exchanges in late 2015, has been conservative in making acquisitions.

In an interaction with VCCircle in April, CEO Om Manchanda had said that efforts were on for acquisitions. “What has held us back is that we are fussy about picking quality assets. We don’t want to make acquisitions just to shore up our volumes or our top line,” he said at the time.

The company operated 200 clinical labs, 2,569 patient service centers and 6,426 pick-up points as on 31 March 2019.

To discuss the emerging opportunities and challenges in dealmaking, Mosaic Digital, the corporate banner behind VCCircle.com, is organising its next edition of M&A Summit on 26 June in Mumbai.

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